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Megawatt Minute

January 23, 2020

FERC Order on MOPR Faces Widespread Opposition, Including From PJM and Clean Energy Associations

By Steven Shparber, Maya Brown

On Tuesday, January 21, 2020, a wide range of entities filed requests for rehearing of the Federal Energy Regulatory Commission’s (“FERC”) landmark and controversial December 19, 2019, order on the Minimum Offer Price Rule (“MOPR”) in PJM’s capacity market (the “December 2019 Order”).  The December 2019 Order greatly expanded the MOPR beyond its traditional use, and if implemented, is poised to raise the price floor of any new resource in the capacity market that receives a state subsidy.  The December 2019 Order had been widely decried by clean energy groups and consumer interests as unfairly targeting clean energy resources and raising prices on consumers, and so it was widely anticipated that these groups would file requests for rehearing of the December 2019 Order. However, in a somewhat unexpected development, PJM itself filed a request for rehearing of the December 2019 Order, and argued strongly against the December 2019 Order. 

PJM notably asserted that the December 2019 Order departs from past precedent and is supported by insufficient record evidence.  PJM’s request for rehearing went on to state that the December 2019 Order “disrupts the pre-existing coexistence of the capacity market with the traditional role of integrated utilities, as well as the subject states, in resource planning and selection” and “departs from prior orders that have charted a more accommodative course . . . that defined a narrower MOPR scope, and that have permitted additional appropriately crafted exceptions.”  PJM further urged FERC to rethink the December 2019 Order’s impact, and averred that it “creates a needless tension, pitting an expansive reading of the Commission’s authority against the realities of the need to recognize the nature of cooperative federalism that underpins administration of the Federal Power Act.” PJM also argued that the December 2019 Order, “needlessly interferes with state resource policies well beyond what is needed to protect the market against inefficient price formation and achieve rates within a zone of reasonableness,” and “works to the detriment of a practical outcome that accommodates state policy objectives.”

The Clean Energy Associations, comprised of the American Wind Energy Association, the Solar Energy Industries Association,* the American Council on Renewable Energy and Advanced Energy Economy, also pushed back against the December 2019 Order.  Notably, the Clean Energy Associations argued that the December 2019 Order erred because it exceeds FERC’s jurisdiction under the Federal Power Act; is incompatible with the Federal Power Act; is arbitrary, capricious, and inconsistent with reasoned decision making; and improperly reconsiders and upholds findings from and earlier June 2018 Order (which originally found PJM’s current capacity market to be unjust and unreasonable) while failing to address timely petitions for rehearing that order.  The Clean Energy Associations further argued that the December 2019 Order would “unwind decades of work to build confidence in [FERC’s] wholesale power markets.”

Whether and how FERC reacts to the widespread opposition to the December 2019 Order remains to be seen, but what is almost certain is that the years-long saga surrounding PJM’s capacity market is far from over.  In terms of likely next steps, stakeholders are expected to continue working with PJM as PJM prepares its compliance filing that will implement the December 2019 Order, which is currently expected to be filed by March 18, 2020. 

* The American Wind Energy Association and the Solar Energy Industries Association were represented by Nelson Mullins in the Clean Energy Associations’ request for rehearing.

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